When Insurance Doesn't Cover Property Damage: One Homeowner's Experience

The Fire and the Claim

On February 17, 2021, a property owned by a homeowner was set on fire. The homeowner submitted a claim to their insurer, Suncorp. Unfortunately, Suncorp denied the claim, citing a clause in the policy's Product Disclosure Statement (PDS) that specifically excluded coverage for malicious acts and vandalism committed by a resident of the insured address with the policyholder's consent.

In this case, the homeowner's son - who was living in the property at the time - had caused the fire and subsequently pleaded guilty.

The Policy Exclusions

The exclusion the insurer cited is a common one in insurance policies. Policies contain various exclusions that limit coverage, and it's important for policyholders to review these carefully and understand what is and isn't covered.

In this case, the exclusion applied to the son's deliberate act that demonstrated "a reckless disregard for the consequences." The fact that the homeowner didn't consent to the fire was irrelevant because the son was living at the property with the homeowner's consent.

The Insurance Claim Dispute

The homeowner argued that the exclusion shouldn't apply because they didn't consent to their son lighting the fire. However, Australian Financial Complaints Authority (AFCA) disagreed, stating that the exclusion applied to anyone living at the property with the insured's consent. The panel said that it was satisfied that the son had caused the fire and that the exclusion applied.

Notably, while the court refused to record the son's guilty plea due to concerns about his mental health, AFCA said that there was not enough information about his state of mind to overrule the insurer's decision. AFCA added that the complainant could ask Suncorp to reassess its liability once a psychiatric report was provided and the court outcome had been determined.

The Settlement Offer

Following the claim's denial, Suncorp offered the homeowner an ex-gratia payment of $261,318, which the homeowner deemed insufficient for repair costs. The homeowner sought an additional $166,159 or $261,328, based on quotes provided.

However, AFCA noted that Suncorp's offer had been based on an itemised repair quote from an assessment by the insurer's builder, which the panel deemed fair.

Conclusion

Insurance policies can be complex and challenging to navigate, especially when dealing with policy exclusions. In this case, the homeowner's insurance policy didn't cover damages caused by their son, even though the homeowner didn't consent to the fire. Understanding the specifics of your policy - including the exclusions - is critical in knowing precisely what you are and aren't covered for.

Published:Thursday, 25th May 2023
Source: Paige Estritori

Share this news item:

Insurance News

Clear

National Climate Risk Assessment Unveils Growing Insurance Challenges

17 Sep 2025: Paige Estritori

The Australian government has unveiled its inaugural National Climate Risk Assessment alongside a comprehensive National Adaptation Plan, highlighting the heightened impact of natural disasters on insurance accessibility across the nation. With an urgent call to action, the government acknowledges the impending climate threats and commits to intensifying efforts towards emission reduction. - read more

ASIC Extends Relief on Distribution Rules for Insurance Providers

16 Sep 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has announced an extension of the exemption allowing general insurance providers to forego appointing product distributors as authorised representatives. This decision comes with the introduction of a new legislative instrument, 2025/520, which renews the previous framework, originally established under instrument 2015/682. The relief will now continue until August 27, 2030. - read more

Cyber Insurance Becomes Essential Amid Rising Digital Threats

12 Sep 2025: Paige Estritori

The recent cyberattack on Fortnum Private Wealth, accompanied by ASIC's legal action, has spotlighted the critical risks cyber threats pose to financial advice companies in Australia. With digital integration intensifying across the finance sector, the owner of Fortnum, Entireti, plans to defend the case, underscoring the necessity for ongoing vigilance in cybersecurity measures. - read more

Swiss Re Foresees Rising Premiums Amid Increasing Global Risks

10 Sep 2025: Paige Estritori

In a comprehensive analysis, Swiss Re Institute predicts that global property and casualty insurance premiums will rise in tandem with GDP over the upcoming decade. This growth is driven by amplified natural catastrophe losses, asset accumulation, and heightened economic and litigation claims inflation. The institute's report outlines the evolving insurance landscape amid increasing global risks. - read more

Insurance Council of Australia Assists NSW Flood Claimants

09 Sep 2025: Paige Estritori

In response to the devastating floods that swept across New South Wales' Mid North Coast in May, the Insurance Council of Australia (ICA) is taking proactive steps to support the affected residents. Insurers, organised by the ICA, will be meeting with flood victims in Kempsey, Taree, and Port Macquarie to provide guidance and support as they navigate their insurance claims. - read more

Click for more Insurance News